What happens to the Exit Subfranchisor's interest in the Franchise Agreement upon transfer?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement may be unilaterally transferred by Subfranchisor without the approval or consent of Franchisee with the consent of Franchisor. Any such transfer shall inure to the benefit of the transferee and Subfranchisor's interest in this Agreement shall automatically terminate on the date of the transfer.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the Subfranchisor's interest in the Franchise Agreement automatically terminates on the date of the transfer. This occurs when the Subfranchisor unilaterally transfers the agreement with the consent of the Franchisor. The transfer benefits the recipient of the agreement.
This means that if an Exit Subfranchisor decides to transfer the franchise agreement to another party, their rights and obligations under the agreement cease immediately upon the transfer date. The new party then assumes the rights and responsibilities outlined in the agreement. This is a standard practice in franchising, ensuring a clear transition of responsibilities and preventing the original Subfranchisor from retaining any control or liability after the transfer.
For a prospective Exit franchisee, this clause ensures that they know who their direct contact and support will be. If the Subfranchisor transfers the agreement, the franchisee will be dealing with a new Subfranchisor from that point forward. It is important for franchisees to understand the conditions under which a transfer can occur and to evaluate the capabilities and reputation of any potential new Subfranchisor.